MILAN (Reuters) - Talks between BlackRock (BLK.N) and Intesa Sanpaolo (ISP.MI) over an asset management tie-up have slowed due to political uncertainty, but the deal is not yet off, two sources familiar with the matter said on Wednesday.

FILE PHOTO: A sign for BlackRock Inc on its building in New York, U.S., July 16, 2018. REUTERS/Lucas Jackson/File Photo

BlackRock has been in talks with Intesa for more than a year to buy a minority stake in asset management unit Eurizon in a deal that would give it access to the Italian lender’s distribution network.

A tie-up with a global asset manager could open the way for Intesa to make other accords with smaller or same-size partners.

The talks, which have stalled several times, accelerated in the second quarter, culminating in a meeting of the two sides at the end of September, one of the sources said.

“Since then it’s all slowed down because the political situation has had an impact on banking valuations, complicating matters,” the source said.

A spokesman for Intesa said reports of a difference of opinion with BlackRock over Eurizon valuations were groundless. BlackRock declined comment.

The idea had been for BlackRock to take a stake of between 5 and 10 percent, the source said, adding: “But there is still a willingness from both sides to continue with talks”.

Italian banking shares .FTIT8300 have lost some 37 percent since mid-May when the new populist government’s expansionary spending plans first spooked markets. On Tuesday the European Commission rejected Italy’s draft 2019 budget.

Domestic government bonds account for 10 percent of Italian banks’ total assets, making them vulnerable to a rise in Rome’s debt costs under the anti-austerity government.

“Intesa is not in the same negotiating position that it was before summer,” a second source said.